Cap and Trade May Be Budget Fiasco

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Gov. Jerry Brown anticipates the state will collect upwards of $1 billion during the coming fiscal yearfrom the state's greenhouse gas cap and trade energy revenues. The program is scheduled to unfold in the nextfew months.

At a time when the state faces a staggering $16 billion deficit, this revenue could be the sweetestfinancial news in years.

Or is it?

CA's Political Mugs

The cap and trade program sets targets for the state's major energy users and pollution emitters.

Thosecompanies that exceed their targets can buy permits for more energy use, a concept that is designed todiscourage consumption while providing more revenues for the state from those that exceed their energyallowances.

The problem is that the legality of the program is anything but certain. Governor Brown may be counting on upto $1 billion next year, but several lawsuits question cap and trade on everything from violations of theConstitution's interstate commerce clause to conflicts with existing state laws.

Given the current state ofconfusion, it's more than a little risky to assume anything about if or when the program would take effect.

Recently, Brown saw a "balanced" budget go down the drain as the result, in part, fromseveral law suits that tossed out reduced commitments to various social welfare programs.

Former governorsArnold Schwarzenegger and Gray Davis suffered similar plights, each making assumptions that failed to last theyear.

But erroneous fiscal forecasts do more than throw the state budget out of whack; they serve as fodder forpublic distrust and cynicism. How, the public wonders, can you--the governor and legislature--say the budget isbalanced one day only to discover an unbalanced budget a few months later?

No wonder the public doesn't knowwhat to think.

Governor Brown and the legislature would be a lot better off if they passed a budget with real dollars ratherthan uncertain, or potential, or coulda-shoulda-woulda dollars. Laboring under those conditions may feel goodfor the moment, but produce considerable pain for all in the end.

Let's hope that cap and trade "revenue" isn't the latest example of Sacramento's fiscal folly. We simply can'tafford dollars that never appear because of wishful thinking.

Published at 11:22 AM PDT on May 21, 2012 | Updated at 11:30 AM PDT on May 21, 2012